Serious dangers of arbitration for the States / www.ohada.com makes its recommendations
STATES MUST NOT UNDERESTIMATE THE RISKS OF ARBITRATION
Arbitration is a method of dispute resolution favored by the OHADA business law unfication reform. By way of consequence, the OHADA reform has ushered in the golden age of arbitration in Africa. This is in itself an extremely positive development.
However, before signing an arbitration clause, it is vital to be aware that arbitration, which is a form of justice delivered by private judges, often private attorneys, is not a panacea despite its obvious advantages, particularly in terms of speed. Indeed, arbitration is a costly procedure and can place the parties involved at considerable and unexpected risks. The parties need also to bear in mind that the means of recourse against an arbitral award are extremely limited.
Companies should think twice before signing arbitration clauses, weigh the pros and cons, and should be aware of the significant risks they may be running. It is only with full knowledge of the potential dangers that the parties should agree to sign arbitration clauses.
As for the States, they should exercise the most extreme caution since they are especially vulnerable to this private justice system, as witnessed by the staggering monetary awards recently issued by arbitrators/private attorneys against certain OHADA States.
Your website www.ohada.com cannot remain indifferent to these particularly harsh rulings handed down against some OHADA States. In fact, behind the States, it is the welfare of the populations themselves that is at stake.
This is the reason why www.ohada.com is recommending that the States do not systematically sign arbitration clauses and do not commit themselves imprudently to a private justice system for which they are ill-prepared and from which they often emerge as massive losers. www.ohada.com recalls that many European countries have enacted legal provisions restricting the possibility of States to sign arbitration clauses, with the purpose of protecting the public interest.
For the many States that have already signed arbitration clauses and face litigation, www.ohada.com emphasises the crucial importance of carefully choosing the arbitrators. It recommends that States opt systematically for three (3) arbitrators and, in the case of an OHADA arbitration based on the CCJA [Common Court of Justice and Arbitration] regulations, it is IMPERATIVE that the choice of the third arbitrator NOT be left to the discretion of the other two arbitrators. In fact, in the case of an OHADA CCJA arbitration procedure, we believe that it is an ABSOLUTE necessity to request that the CCJA appoint the third arbitrator, who will preside the arbitral tribunal. Finally, in choosing their arbitrators, the States should choose top-ranking personalities, recognised for their impartiality, integrity, service to the general interest, their service to Africa, their financial disinterest and incorruptibility and their genuine desire to protect the wellbeing of the populations.
For the future, with regard to the exorbitant monetary awards recently handed down against certain OHADA States and de facto their populations, www.ohada.com emphatically recommends that the States make every effort to avoid signing arbitration clauses, leaving this private system of dispute resolution exclusively to private business corporations.